With the 2025 Legislative Session approaching, MACo is profiling major issues, including energy, that stand to gather significant attention.
The 2025 legislative session is shaping up to be the “Session of Energy.” As the General Assembly reconvenes, the top priority will be expanding Maryland’s domestic energy production and building out transmission infrastructure. So far, Maryland has struggled to meet its ambitious renewable energy targets, even as electrification and economic policies drive up demand. Adding to the challenge are ongoing debates about balancing ecosystem preservation, supporting agriculture, and promoting affordable housing development. It’s clear that 2025 will be a pivotal and dynamic year for Maryland’s energy agenda.
According to the 2025 Issue Papers:
Under the State renewable energy portfolio standard, 52.5% of all electricity sales in Maryland must come from renewable energy sources by 2030; recently enacted legislation provided further incentives for solar and offshore wind projects to meet that requirement. Anticipated energy capacity needs pose significant adequacy issues for the electric grid in Maryland and the surrounding region, resulting in new proposed transmission lines and the potential colocation of data centers with generation sources. Finally, the Public Service Commission is reviewing whether there is a continuing need for the Strategic Infrastructure Development and Enhancement program.
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Solar Energy
Unlike most other sources of renewable energy, solar is eligible for inclusion in meeting the RPS only if the source is connected with the electric distribution grid serving Maryland. In recent years, there has been a persistent shortfall in the number of available solar RECs (SREC) available, leading to increasing reliance on ACPs and SREC prices near their theoretical maximum.
Chapter 595 of 2024 established several programs and incentives for solar energy. For example, Chapter 595 requires PSC to establish a Small Solar Energy Generating System Incentive Program. Under the program, a solar energy generating system that meets specified requirements and is certified by PSC generates “certified SRECs,” which have a compliance value of 150% for electricity suppliers to apply toward meeting the solar carve-out for the RPS. The Act sets maximum generating capacity thresholds for certified systems under the program and specifies the process for an owner of a solar energy generating system to apply to the PSC for certification under the program. By January 1, 2025, PSC must begin determining the eligibility of solar energy generating systems to be certified under the program.
To increase deployment of customer-sited solar energy generating systems and provide grants to eligible customer-generators that have installed solar energy generating systems, Chapter 595 requires MEA to establish a Customer-Sited Solar Program. By January 1, 2025, MEA must establish application and income verification procedures for the program and award grants from the program. The program is funded through a portion of solar ACP revenues and terminates June 30, 2027.
In addition to energy generation, issues such as transmission infrastructure and demand from the growing data center industry will increasingly take center stage.
Transmission Line Siting
PJM Interconnection, LLC (PJM) is the federally designated regional transmission operator for Maryland and several other surrounding states. In addition to operating the transmission grid for 13 states and the District of Columbia, PJM also dispatches electric generating stations to serve these jurisdictions and takes various actions to promote development of generation and transmission facilities needed to serve the regions within its footprint. PJM has determined there are resource adequacy issues in the eastern portion of its service territory, particularly in central Maryland, as a result of added capacity needs from data centers and the retirement of coal-fired plants and has solicited solutions for meeting those needs. Aiming to reduce the present and projected resource adequacy issues in the State and surrounding region, PJM approved proposals to build transmission lines from a nuclear plant in Pennsylvania, through Maryland, to Virginia.
Any project in the State attempting to build high-voltage transmission lines must receive a certificate of public convenience and necessity (CPCN) from PSC. Generally, PSC must take final action on a CPCN application only after due consideration of (1) recommendations of the governing body of each county or municipality in which any portion of the project is proposed to be located; (2) various aspects of the State infrastructure, economy, and environment; and (3) the effect of climate change on the project. Additional requirements specifically for transmission lines include due consideration by PSC of the need to meet existing and future demand for electric service and, for new lines, alternative routes considered by the applicant.
In granting a CPCN, PSC’s authority preempts the zoning and siting requirements of the municipality or county. The issuance of a CPCN for a transmission line also allows the person to exercise eminent domain on any property or right necessary for its construction or maintenance, in accordance with Title 12 of the Real Property Article. Project developers are still required to obtain local permits once the CPCN is issued.
Colocation of Data Centers
Data centers represent a significant potential increase in new demand on the electric grid in the State. With the advent of artificial intelligence and its associated computational demands, electric power requirements for a large-scale data center can be multiple hundreds of megawatts and even upwards of a gigawatt. Connecting these data centers to the electric grid would almost certainly require construction of new transmission lines to accommodate them. As an alternative, owners of data centers are promoting the option of colocation. Under this arrangement, a data center locates on-site and behind-the-meter with a generating source – recent proposals have involved nuclear power plants – and meets its own power needs “off the grid.” Proponents of colocation assert that it expedites timelines for bringing data centers online, reduces the need for new transmission projects, lowers some costs, and provides a steady customer for the generating source. Opponents point to increased market prices associated with losing an existing generator serving other existing load, increased infrastructure costs that come with serving any new load, negative impacts to grid reliability, and “cost shifts” from the data center to grid customers.
Chapter 537 of 2024 requires PSC to study and make recommendations on issues related to colocated load configuration and to report its findings and recommendations to specified committees of the General Assembly by December 15, 2024. Required areas of study include potential cost, energy market, and reliability impacts and their mitigation.
